UK construction sector growth slows to nine-month low

Will Green is news editor of Supply Management
2 February 2016

The UK construction sector grew at the slowest pace for nine months in January, according to a survey of buyers.

The Markit/CIPS UK Construction Purchasing Managers’ Index slumped to 55 in January, down on 57.8 in December and against the no-change position of 50.

Firms reported the lowest business confidence since December 2014, while job creation was the slowest for almost two-and-a-half years, against a background of softer new business growth.

Higher levels of work were recorded across all three areas of construction activity but commercial work remained the strongest category, with house building expansion the second weakest in more than two years and civil engineering the worst performer.

Survey respondents cited greater caution among clients and less favourable underlying demand conditions for the slowdown in new work, though some firms reported an upturn in infrastructure contracts and new residential building work.

Companies signalled the slowest upturn in subcontractor usage for six months, while input buying expanded at the weakest rate since April 2015.

Supply chain pressure persisted in January, highlighted by further lengthening of vendor delivery times, though lower fuel and energy costs helped offset rising prices for construction materials.

David Noble, group CEO, CIPS, said: “Supply chains were weighed down by the pressures of a shortage of bricks and blocks as delivery times became longer in an attempt to fulfil recent orders from last year. Optimism was still high, however, as business expansion plans continued although at a slightly more muted pace.”

Tim Moore, senior economist at Markit, said: “Business confidence appears to have subsided across the construction sector, following the multiyear highs seen in 2015. The latest survey indicated that construction companies are less upbeat about their prospects for growth than at any time since December 2014.”

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